Congo’s central bank makes huge rate hike to 18.5%

A picture taken on April 25, 2020 shows the completely deserted Boulevard du 30-Juin in the residential commune of Gombe in Kinshasa in the Democratic Republic of Congo, during an COVID-19 outbreak, caused by the novel coronavirus. - Considered the epicenter of the coronavirus epidemic in the DRC, the commune of Gombe has been isolated from the rest of the city since April 6, which represents a disaster for the thousands of street vendors in the informal sector who come here to make a living in normal times. (Photo by SAMIR TOUNSI / AFP) (Photo by SAMIR TOUNSI/AFP via Getty Images)

DAKAR – The central bank of Democratic Republic of Congo has raised the main interest rate to 18.5% from 7.5%, central bank official Plante Kibadhi said on Saturday.

The regulator had lowered the rate from 9% in March in order to cushion the economy from the impact of the coronavirus crisis, following similar actions by African central banks as the virus spread across the continent.

The latest rate hike was carried out to re-anchor inflation expectations, the International Monetary Fund said.

Year-on-year inflation in Congo stood at over 14% as of end-July, around 10 percentage points higher than at the same point last year, according to central bank figures.

The central bank has previously said it expects the economy to contract 2.4% this year compared with growth of over 4% in 2019 partly due to coronavirus-linked disruptions to mining, which accounts for a third of national output.

The pandemic has also dampened global demand for metals and other raw materials.

Reporting by Hereward Holland; Writing by Alessandra Prentice; Editing by Alison Williams and Daniel Wallis

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